The enormous wave of privatisations includes the sale of a remaining £11.5bn holding in Lloyds, while bidders including Goldman Sachs compete to buy £13bn of mortgage assets from the remains of Northern Rock and Bradford and Bingley.

The 81 per cent stake in RBS is worth approximately £33bn at current market prices. Osborne will begin with a small sale to institutional investors, potentially followed by a sale to retail share buyers.

In his annual Mansion House speech last night, the chancellor said that after consulting with Bank of England governor Mark Carney and the financial advisory firm Rothschild, he had reached a “decision point”. Osborne said that there is “no doubt that starting to sell the government’s stake in RBS is the right thing to do.” He added: “It’s the right thing to do for British businesses and British taxpayers.”

“Yes, we may get a lower price than Labour paid for it. But the longer we wait, the higher the price the whole economy will pay.”

Carney said returning RBS to private ownership will “promote financial stability, a more competitive banking sector, and the interests of the wider economy” while avoiding “considerable net costs to taxpayers of further delaying the start of a sale.”

Rothschild estimated a loss of £7.2bn to the taxpayer from RBS, but the Treasury said that the losses would be “much more than offset” by proceeds from other banking sector interventions, such as the sale of shares in Lloyds.

Labour described the move as a “fire sale”, as the RBS shares will be sold at below the break-even price.

However, as the Lloyds sale is bringing in a profit for the taxpayer, and the banks have paid a variety of fees and charges to the Treasury, Osborne argues the bailouts overall will end in a £14bn profit to the public purse.

It came as the Department for Business, Innovation and Skills sells £767m of Royal Mail shares. The state began to sell half of its remaining 30 per cent stake in the postal delivery company last night, in an accelerated bookbuild, aiming to cut its holdings to 15 per cent.

Bank of America Merrill Lynch, Goldman Sachs and JP Morgan had already built a full book of orders, with current shareholders and new investors thought to have ordered shares in the company.

Shares have not yet been priced but traditionally secondary placings have a discount of between three and seven per cent, with a number of deals recently pricing at a 4.5 per cent to five per cent discount.